1978 (10) TMI 139 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction of the Commissioner of Commercial Taxes to revise the Deputy Commissioner's order under section 24(4) of the Bihar Sales Tax Act, 1947.
2. Application of the doctrine of merger in tax assessment orders.

Detailed Analysis:

1. Jurisdiction of the Commissioner of Commercial Taxes:

The primary issue was whether the Commissioner of Commercial Taxes, Bihar, had jurisdiction to revise the Deputy Commissioner's order dated 4th July 1963, under section 24(4) of the Bihar Sales Tax Act, 1947, given that the order had been subsequently addressed by the Commercial Taxes Tribunal on 28th May 1965. The dealer argued that the Deputy Commissioner's order had merged into the Tribunal's order, thus stripping the Commissioner of the jurisdiction to revise it. The Tribunal accepted this argument, relying on a previous decision in Revision Case No. 217 of 1966, which had been affirmed by the High Court in Commissioner of Commercial Taxes, Bihar, Patna v. Rameshwar Das Panna Lal [1974] 34 S.T.C. 296.

2. Application of the Doctrine of Merger:

The doctrine of merger was central to this case. The department argued that the doctrine should only apply when the higher tribunal specifically considers the points dealt with by the lower tribunal. Since the Tribunal did not apply its mind to the Deputy Commissioner's allowance of the deduction of Rs. 5,07,431, the department contended that there was no merger. They cited the Supreme Court's decision in State of Madras v. Madurai Mills Co. Ltd. [1967] 19 S.T.C. 144 (S.C.) to support this view.

The court, however, clarified that the doctrine of merger means the absorption of one order into another when the appellate or revisional authority examines the entire process of assessment and either confirms, modifies, sets aside, or enhances the assessment. The assessment order merges into the appellate or revisional order, which then becomes the operative decision. The court referenced the Supreme Court's decisions in Collector of Customs, Calcutta v. East India Commercial Company Ltd., Calcutta A.I.R. 1963 S.C. 1124, and Commissioner of Income-tax v. Amritlal Bhogilal & Co. [1958] 34 I.T.R. 130 (S.C.) to elucidate this principle.

The court further explained that the doctrine of merger depends on whether the subject-matter traversed by the lower and higher tribunals is the same. If the appellate or revisional authority addresses the same transactions as the assessment order, the latter merges into the former. This principle was affirmed by the Supreme Court in the case of Commissioner of Income-tax v. Tejaji Farasram Kharawala [1953] 23 I.T.R. 412.

In this case, since the transactions in question were part of the assessment order, the appellate order of the Deputy Commissioner, and the revisional order of the Tribunal, the assessment order merged into the Tribunal's order. Even if the Tribunal did not specifically consider part of the transaction, the entire assessment order, including the Deputy Commissioner's order, merged into the Tribunal's order.

Conclusion:

The court concluded that the Commissioner of Commercial Taxes had no jurisdiction to revise the Deputy Commissioner's order dated 4th July 1963, as it had merged into the Tribunal's order dated 28th May 1965. The question was answered in the affirmative and against the department, with the respondent entitled to costs of Rs. 250.

Separate Judgments:

Both judges, Sarwar Ali and Shiveshwar Prasad Sinha, concurred in the judgment, with Sarwar Ali explicitly stating his agreement. The reference was thus answered in the affirmative.

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